Old is gold: China’s silver spenders – not millennials, Gen Z struggling with rising living costs – set to shape country’s economy
- Deep-pocketed newly elders born in the 1960s are expected to become a major driver of consumption patterns in the next five to 10 years
- We are going to have the wealthiest generation to retire in China, says executive of firm focusing on businesses serving country’s elderly
Liu Yan, a 61-year-old retired accountant living in Tianjin, has just taken delivery of a new fixed-focus lens he bought online for about 4,000 yuan (US$617). It is the third lens he has bought for his Canon R5 camera, which he purchased last year for about 25,000 yuan.
“Fixed-focus lenses are better for portrait photography, to capture my lovely wife’s beautiful smile,” he says as he packs his photography gear for the couple’s next trip, to China’s Qinghai province. “I will use my zoom lens to take photos of the Tibetan antelope.”
A world map on the wall is covered with little red pegs, each a record of the cities and countries Liu and his wife have travelled to in the past five years. This year, they have already been to five different provinces within the country.
“We worked hard for about 30 years, raised our daughter and took care of our families. Now, we would like to treat ourselves,” Liu says.
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“This generation will become a major driver of consumption patterns in the country in the next five to 10 years,” says Duan Mingjie, the CEO of AgeClub, a Beijing-based consulting firm that focuses on businesses serving China’s elderly. “We are going to have the wealthiest generation to retire in China.”
The findings, which were released in May, led to concerns that China’s ageing population would pose a challenge to domestic consumption, which is viewed by policymakers in Beijing as crucial to a post coronavirus pandemic economic recovery.
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But this concern, that as China’s population ages, its spending power will drop, is unfounded, says Duan. “In fact, [this spending power] will just shift to other sectors. The newly elder generation is more willing than any other age group to spend in order to stay in touch with trends, and they are actually capably of doing so,” he adds.
AgeClub has held annual forums for businesses catering to seniors every year since its inception in 2017. And while less than 50 companies attended these meetings to begin with, more than 500 showed up last year. More than 2,500 companies targeting the newly elder have approached the firm, Duan says.
This population has greater freedom to pursue preferred lifestyles, according to a survey conducted in August last year by Credit Suisse’s China Quantitative Insight team. This group is more likely to own property and a car, and have only one child.
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It is expected to contribute a large chunk of sales as far as tourism, entertainment, health care services and health foods, and education are concerned, according to the Swiss investment bank. Nearly half of the respondents to the survey said they planned to spend more on travel after retirement, making it their top area of interest and source of increased expenses. In comparison, less than a fifth of those who had already retired had increased their travel spending.
But most importantly, the newly elders are spending not only more than those who are older than them – they are also outspending younger Chinese consumers.
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This younger generation is paying about a third or even half of their salaries on average in rents or mortgages, or for their children’s education. Meanwhile, the culture of 996 – working 9am to 9pm, six days a week – that is an unwritten rule for most of China’s companies, is leaving them with little time to relax.
Pensions in China amounted to 4,020 yuan a month on average last year, based on data from the Ministry of Human Resources and Social Security. In comparison, the average salary of a fresh graduate stood at 5,290 yuan, according to online recruitment portal Zhilian Zhaopin.
Even though young people are receiving about 1,000 yuan more each month, they need to spend about 40 per cent of their salaries on rent in coveted job markets such as Beijing, Shanghai and Shenzhen.
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“Young people – who are still struggling with their careers, getting a home and supporting a family – are reluctant and cannot afford to entertain themselves. The newly retired, on the other hand, do not need to spend on these things and have more disposable incomes. They are, therefore, more enthusiastic about fulfilling their emotional needs,” says Huang Jihai, the chairman and founder of senior education company Meihao Shengnian.
Meihao Shengnian, founded in 2014, now has 12 schools in Guangzhou that offer courses to seniors. It has about 34,000 enrollees between the ages of 50 to 70, who are learning new things, ranging from vocal classes, folk and classical dances, to modelling in qipaos and clothing from the Han dynasty.
“A lady in her 50s is taking classes that range from modelling to dancing every day. She hasn’t missed a session in over a year. When I asked her if she found it all too exhausting, she said she had never felt better,” Huang says.
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Meihao Shengnian organises competitions every week to offer seniors a stage to showcase their talents. These competitions are fully booked in seconds. “They are big spenders who like to splash money on their dreams and pursuits. For example, participating in a modelling competition, they are never shy about buying new outfits, cosmetics, or even a full set of SLR camera equipment to capture their moment of glory,” Huang says.
Xie Qing, a retired 58-year-old maths teacher in Tianjin, is busy preparing cupcakes for an assignment. She spends between 3,000 yuan and 4,000 yuan a month on cooking classes, for which she has bought equipment, an oven, as well as various ingredients.
“I’ve dreamt about being a Western dessert chef since the first time I had a chocolate cake when I was a little girl. But I had to take up a serious job that could support my family instead,” says Xie, who retired three years ago. “Now, I finally have the time and the money to spend on whatever I want.”
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“I’ve got more than 1,000 followers on cooking app Xiachufang, where I post my dessert recipes and cooking vlogs,” she adds.
Xie, who creates vlogs of her cooking assignments, and Liu, who buys his camera equipment online, also point to another interesting fact – China’s newly elders are savvy internet users.
Compared to their peers in the US and Europe, where people are more likely to drive to supermarkets and pay using cash and credit cards, Chinese seniors buy products and services online far more frequently thanks to the country’s booming e-commerce sector.
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According to a report published last year by Alibaba Group Holding, which owns this newspaper as well as online shopping platform Taobao, customers over the age of 60 were more active on Taobao than any other age group. Moreover, their spending on the platform had increased about 21 per cent over the past three years, a growth rate second only to that of Generation Z’s.
As a result, market observers are betting on a further rise in online spending by China’s newly elders.
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“Those born in the 1970s, who are in their 50s now, will turn 60 in the next five to 10 years. And it is in this period that we expect to see a blossoming of seniors who are more willing to pay online,” says Li Hui, the co-founder of Xiaoniangao, a mobile app and online community operator focusing on photo sharing by seniors.
“They had a sophisticated experience of online purchases when they were younger – and will know how to spend efficiently online, as compared with the retirees that came before them,” Li says.
Illustration: Kevin Wong
